MARKET WRAPS
Stocks:
European stocks were lower on Thursday as investors parsed economic data from China and Germany.
Chinese exports edged up 0.5% in November, while imports showed fresh weakness, falling 0.6%.
November's growth in exports won't be enough to meaningfully boost China's economy , economists said, with the country suffering from a protracted downturn in the property market, mounting government debt and sluggish consumer spending.
Weak industrial production figures from Germany also dented sentiment. Output of production in manufacturing, energy and construction unexpectedly dipped 0.4% in October, well behind a forecast of an increase of 0.5%.
Stocks to Watch
Citi thinks Equinor's Capital Markets Day on Feb. 7 will see the market look to reassess the increasing maturity of the company's core oil and gas business , with volume declines of 1%-5% a year in this business looking likely from 2026.
Merck KGaA's failed late-stage clinical studies for its evobrutinib experimental drug in multiple sclerosis suggests similar drug candidates will have to clear a high bar, Jefferies said.
The results of the clinical trials seem due to a better performance than expected from Sanofi's Aubagio, the drug against which evobrutinib's efficacy in reducing the relapse rate of multiple sclerosis was being tested, Jefferies said.
"This suggests to us that the bar for success in MS studies isn't what we thought it was, and could pose risk to ongoing studies for [Sanofi's] tolebrutinib, [Roche Holding's] fenebrutinib and [Novartis's] remibrutinib," it added.
U.S. Markets:
Stock futures were subdued ahead of the weekly unemployment claims data.
Bond markets stabilized as the 10-year yield inched up toward 4.15%.
Stocks to Watch
GameStop reported a 9% sales drop for its most-recent quarter. Shares fell more than 6% premarket.
Forex:
November was a very negative month for the dollar, with the DXY index falling by almost 4%, and the near-term outlook isn't much better due to evidence of a weakening U.S. economy, Natixis Research said.
Increasing signals of a slowdown in U.S. growth combined with continued slowing of inflation, has reinforced market expectations of Fed interest-rate cuts and should weigh on the dollar, it said.
"In an environment of soft landing for the U.S. economy and a potentially substantial cut in Fed Funds rates, the dollar will continue to perform poorly over the coming months."
Bonds:
The bond market rally has come very far and some consolidation seems on the cards, Commerzbank Research said.
"With forwards now pricing 143bp in ECB [interest-rate] cuts until the end of next year, consistently weaker macro data and the absence of any positive inflation news seem required to protect the rally," it said.
Energy:
Oil prices regained some ground after falling to their lowest levels since July earlier this week.
Following OPEC+'s output cuts announcement, which left traders broadly disappointed, concerns around weakening demand and an oversupplied market remained.
Meanwhile, the latest EIA report showed U.S. crude oil inventories fell more than expected last week but gasoline and distillate inventories rose.
Metals:
Base metals prices moved higher, while gold remained firm, buoyed by a weaker dollar ahead of Friday's key employment data from the U.S.
Investors are worried over worsening economic data and slowing growth going into 2024, Peak Trading Research said.
Investors expect 185,000 nonfarm jobs to be added to the U.S. economy Friday, with an unemployment rate of 3.9%, it added. A weaker jobs report would likely stress the dollar, a bullish sign for commodities, Peak said.
EMEA HEADLINES
Coming EU Rules on AI May Shape Companies' Use of Automated Systems
BRUSSELS-The European Union passed a strict privacy law in 2018 that influenced the way companies handled personal data. Coming rules on AI might have a similar effect in shaping corporate use of AI systems, said the head of privacy at tax software maker Intuit.
The company, which offers financial software including TurboTax and CreditKarma and the newsletter distribution service Mailchimp, already engineers products that can be used in different jurisdictions to avoid adjusting them to changing local data and privacy rules that have cropped up in many countries, said Elise Houlik.
Europe's Gas Prices Could Fall Further Next Year on Subdued Demand, Ample Inventories
European natural-gas prices are expected to decline further next year amid lackluster demand and above-average inventories despite a cold start to the winter across the continent, according to some analysts.
A wave of chilling temperatures has swept parts of Europe in recent days but did little to lift prices, with storage sites at comfortable levels after unusually mild weather over the fall delayed the start of the heating season and preserved stockpiles.
GLOBAL NEWS
The Most Important Debate on Wall Street: Is Inflation Licked?
Most of Wall Street thinks inflation has been conquered. There is a lot at stake if they are wrong.
Encouraging inflation data recently propelled a big rally across markets, with a traditional portfolio of stocks and bonds last month delivering one of its best returns of the past 30 years.
Investors Should Think Beyond Tech to Access AI Investment Momentum
SYDNEY-Investors looking to buy into momentum around artificial intelligence should consider stocks outside of the technology sector.
That is the view of Ron Temple, chief market strategist at financial advisory and asset-management firm Lazard. Temple thinks that the most attractive opportunity over the next two to three years is in U.S. large-cap stocks that profit from AI by improving the quality of their services, rather than developers of the technology itself.
Congress Moves Forward on Roughly $900 Billion Defense Bill
WASHINGTON-House and Senate lawmakers agreed to scrap the most contentious pieces of a nearly $900 billion defense and national security policy bill, such as restrictions on abortion and transgender care for service members, clearing the way for its passage by the end of the year.
Lawmakers who serve on both chambers' Armed Services committees on Wednesday night released compromise text for the annual National Defense Authorization Act. This year's NDAA, which lays out top policy priorities for the Pentagon, calls for a 5.2% pay raise for service members and military training assistance to Taiwan to help the island defend itself against a possible invasion by China.
Atomic Power Is In Again-and China Has the Edge
SINGAPORE-China became the first country to put the latest evolution in civilian nuclear technology into use, placing it at the cutting edge of atomic power just as climate change is bringing nuclear plants back into vogue.
With soaring global temperatures and concerns about climate change casting a renewed spotlight on nuclear as a low-carbon power source, China said Wednesday that the first-ever fourth-generation nuclear power plant began commercial operation in the eastern province of Shandong following seven days of continuous operation.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
12-07-23 0608ET
